Legislation affecting an industry, such as the financial services industry, are often enacted at various governmental levels, including, federal, state and municipal or county levels. For example, in 1994, the United States Congress enacted the Federal Home Ownership and Equity Protection Act, which regulated the making of mortgage loans.
Traditionally, compliance with legislation affecting the financial services industry was determined either manually or by a specially developed computer program. In either case, compliance with relevant legislation is determined by comparing the terms of a given financial transaction, such as a loan, with the requirements and restrictions of the relevant legislation. Known computer based approaches to determining compliance with legislation use traditional, procedural programming languages, wherein compliance is determined in a “linear” fashion, that is, a series of sequential conditions that are evaluated. After every possible condition is evaluated, the results of the evaluations are output.
A disadvantage of such a “linear” programming approach is that for every financial transaction to be analyzed, the program must run from the beginning to the end, and many conditions that are not relevant to determining whether the given financial transaction complies with the relevant legislation are nevertheless evaluated. Such an approach consumes more computing resources, including processing time and memory, than is necessary.
Another disadvantage of such a linear approach is that the relevant legislation, which is generally comprised of a set of rules, must be translated into a sequential computer program. Translating the legislation into a sequential computer program requires substantial modifying of the general framework of the legislation from a system of rules to a sequential computer program comprised of multiple branching decision points.
There are known computer based approaches that employ rules-based programming. Such known rules-based programming approaches, however, require that the language of the legislation itself be translated into the syntax of the rules-based computer programming language.
Thus, there is a need in the art for a computer based approach to determining whether a given financial transaction complies with relevant legislation that does not have the disadvantages of the known approaches.